20 Jan 2025

• Gold price attracts some dip-buying amid a fresh US Dollar selling, though it lacks follow-through.
• Bets that the Fed will pause its rate-cutting cycle cap gains for the XAU/USD amid the risk-on mood. 
• Traders now keenly await US President-elect Donald Trump’s inaugural address for a fresh impetus.
• Gold prices (XAU/USD) are drawing some dip-buyers around the $2,689 mark on Monday; however, there is a lack of momentum, and prices remain below a one-month peak during the early part of the European session. A generally optimistic sentiment in the equity markets is proving to be a significant obstacle for the safe-haven precious metal, particularly as there is an increasing consensus that the Federal Reserve (Fed) will halt its rate-cutting cycle later this month.
  
  Traders appear hesitant and are choosing to await US President-elect Donald Trump's inaugural address scheduled for later today before making any directional trades, coinciding with a US bank holiday in honor of Martin Luther King Jr. Day. Meanwhile, expectations that the Fed will implement two rate cuts this year, in light of diminishing inflationary pressures in the US, are not enabling the US Dollar (USD) to build on Friday's gains, thereby failing to provide support for the non-yielding yellow metal.

• Gold price lacks firm intraday direction amid mixed fundamental cues

  Gold prices have experienced increases for the third consecutive week, driven by speculation that the Federal Reserve may consider further interest rate cuts in 2025, which is favorable for gold. This optimism was bolstered by the recent release of the US Producer Price Index (PPI) and Consumer Price Index (CPI), indicating a reduction in inflationary pressures in the United States during December.
  
  Additionally, Fed Governor Christopher Waller remarked last Thursday that inflation is expected to continue its downward trend, potentially allowing the central bank to implement interest rate cuts sooner and more aggressively than previously anticipated.
  
  The US Dollar has struggled to maintain momentum following Friday's positive developments, while concerns regarding the trade tariffs proposed by President-elect Donald Trump continue to support the safe-haven appeal of gold (XAU/USD).
  
  In light of the ceasefire agreement between Israel and Hamas, there are hopes that Trump may ease restrictions on Russia in exchange for a resolution to the Ukraine conflict, which contributes to a more favorable risk sentiment.
  
  Moreover, the Federal Reserve is anticipated to pause its rate-cutting strategy later this month, as expectations surrounding Trump's policies could lead to increased inflation, thereby limiting the appeal of the non-yielding yellow metal. Traders are likely to exercise caution and avoid making aggressive directional bets ahead of Trump's inaugural address scheduled for this Monday, as well as the upcoming US holiday in honor of Martin Luther King Jr. Day.

  Gold price seems poised to climb beyond $2,724-2,725, or one-month top

  
  

  From a technical standpoint, any upward movement is expected to encounter resistance around the $2,715 level, followed by the $2,724-2,725 range, which represents a one-month peak reached last Thursday. With oscillators on the daily chart showing positive momentum, it is anticipated that continued buying interest will facilitate a rise towards the intermediate resistance at $2,745, leading towards the $2,760-2,762 area. The XAU/USD may ultimately seek to challenge the all-time high near the $2,790 mark, which was reached in October 2024.
  
  Conversely, a significant decline below the immediate support levels of $2,700-2,690 could present a buying opportunity, with potential limitations near the $2,662-2,662 range. This latter level is expected to serve as a critical threshold; if breached, the price of Gold could decline to the $2,635 area, progressing towards the $2,620-2,615 confluence, which includes a short-term ascending trend line originating from the November swing low and the 100-day Exponential Moving Average (EMA).